Royal Bank of Canada (TSX:RY)(NYSE:RY), the largest bank in Canada in terms of total assets, has watched its stock underperform in the overall market in 2015, falling about 4%, but it has the potential to be one of the top performers from this point forward. Let’s take a look at three reasons why you should consider initiating a long-term position today.

1. Record earnings to support a higher stock price

RBC released record first-quarter earnings results on the morning of February 25, and its stock has responded by rising over 2.5% in the weeks since. Here’s a breakdown of 10 of the most notable statistics from the report compared to the year-ago period:

  1. Net income increased 12.5% to $2.46 billion
  2. Adjusted earnings per share increased 14.6% to $1.65
  3. Revenue increased 14% to $9.64 billion
  4. Non-interest income increased 20.3% to $6.01 billion
  5. Net interest income increased 4.9% to $3.63 billion
  6. Total assets increased 20.1% to $1.09 trillion
  7. Total deposits increased 10.1% to $654.71 billion
  8. Total loans and acceptances, net of allowances for loan losses, increased 7.9% to $459.99 billion
  9. Return on shareholders’ equity improved 40 basis points to 19.3%
  10. Book value per share increased 13.7% to $35.59

2. Inexpensive current and forward valuations

At current levels, RBC’s stock trades at just 11.7 times fiscal 2015’s estimated earnings per share of $6.56 and just 11.2 times fiscal 2016’s estimated earnings per share of $6.90, both of which are inexpensive compared to its five-year average price-to-earnings multiple of 13.5.

Also, the company’s stock trades at a mere 2.17 times its book value per share of $35.59, which is very inexpensive compared to its market-to-book value of 2.38 at the conclusion of fiscal 2014.

I think RBC’s stock could consistently command a fair price-to-earnings multiple of at least 13, which would place its shares upwards of $85.25 by the conclusion of fiscal 2015 and upwards of $89.50 by the conclusion of fiscal 2016, representing upside of over 10.5% and 16%, respectively, from today’s levels.

3. A very high dividend yield

RBC pays a quarterly dividend of $0.77 per share, or $3.08 per share annually, which gives its stock a very high 4% yield at current levels. It is also worth noting that the company has increased its dividend eight times in the last four years, showing that it is strongly dedicated to maximizing the amount of capital it returns to shareholders, and I think this makes it one of the top dividend growth plays in the market today.

Should you go long Royal Bank of Canada today?

Royal Bank of Canada’s stock could be one of the market’s top performers over the next several years. It has record earnings to support a rally, trades at inexpensive valuations, and has a bountiful 4% dividend yield. Foolish investors should take a closer look at RBC and strongly consider making it a core holding.

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Fool contributor Joseph Solitro has no position in any stocks mentioned.